Azul and Gol abandon merger; IATA chief cites restructuring and competition

December 10, 2025 at 06:16 PM•2 min read

Azul and Gol abandoned their merger plans, influenced by Azul's deep restructuring and Brazil's competition concerns.

Key Points

1Azul and Gol abandoned their proposed merger, with IATA's Willie Walsh citing Azul's ongoing Chapter 11 restructuring.
2The shelved deal would have created a dominant carrier controlling 60% of Brazil's domestic market, raising significant competition worries.
3Azul is currently in Chapter 11, aiming to cut over $2 billion in debt and exit by early 2026 after fleet reduction.
4Consolidation in Brazil is now driven by market-led groups like Abra, expanding regionally without creating a domestic near-monopoly.

Airline chiefs, including International Air Transport Association (IATA) head Willie Walsh, supported Azul and Gol's decision to shelve their proposed merger. The deal, which had backing from ministers in Brasília, aimed to create a dominant carrier controlling approximately 60% of Brazil’s domestic market, surpassing LATAM. However, Walsh argued against combining two airlines when one, Azul, is still undergoing a significant restructuring process in a U.S. bankruptcy court.

The proposed merger faced substantial hurdles due to the precarious financial states of both airlines. Gol had only recently emerged from Chapter 11 in June with $900 million in liquidity, while Azul entered Chapter 11 in May with nearly $9.6 billion in total debt. Azul's court-approved plan seeks to reduce over $2 billion of this burden, supported by $1.6 billion in special financing and up to $950 million in fresh equity, with an expected exit by early 2026. Attempting to integrate networks, negotiate share splits, and appease Brazil's antitrust watchdog while Azul's valuation, fleet, and capital structure remain in flux was deemed too risky.

Regulators and consumer groups had already voiced concerns that a combined Azul-Gol entity could lead to a near-monopoly on numerous routes, potentially increasing fares and degrading service quality over time. Instead, consolidation in the region is progressing through market-driven initiatives, such as Abra Group's expansion. Abra is integrating Chile’s low-cost Sky Airline alongside Avianca, Gol, and Wamos, forming a 300-aircraft group serving 140 destinations and 70 million passengers annually. This incremental approach fosters scale without creating an oversized domestic giant, preserving competition for Brazilian travelers and demonstrating a preference for financial discipline over politically motivated mega-projects.